Sunstein’s Disingenuous Regulation Claims

Jul 1, 2011

In the Washington Post, Cass Sunstein, administrator of the Office of Information and Regulatory Affairs (OIRA), aka President Obama's "regulatory czar," pooh-poohed the idea that the administration is burying businesses under piles of regulations and called out the Chamber for putting on the Regulatory Road Show to educate Americans on the need to restore checks and balances to the regulatory process.  

Sunstein’s claim that the Bush administration wielded a heavier regulatory hand than has the Obama administration is disingenuous to say the least. He compares the last two years of the Bush administration with the first two of the Obama administration and asserts that the Obama administration issued fewer major regulations than the Bush administration.

To begin with, it is not clear how Sunstein calculated the numbers used to support his claims. For example, the GAO website states that the number of promulgated major rules that were reported to Congress in the last two years of the Bush Administration totaled 178. There were 195 such rules reported in the first two years of the Obama Administration, according to GAO.

The OIRA website also reports that it conducted a total of 218 economically significant executive order reviews in the last two years of the Bush Administration compared to 264 in the first two years of the Obama Administration. 

Finally, the authoritative Competitive Enterprise Institute study of regulatory activity reports 339 economically significant rules, defined as costing $100 million or more, in the last two years of the Bush Administration compared to 408 economically significant rules in the first two years of the Obama Administration. 

The Obama Administration has rendered the $100 million threshold insignificant. Its rulemaking machine turns them out at the billion-dollar-a-rule level. For example, the EPA’s list of proposed billion dollar rules includes the utility MACT, standards for cooling water intake structures, reconsideration of the 2008 NAAQS for ground-level ozone, the clean air transport rule, the coal ash rule, performance standards for coal- and oil-fired electric generating units rule, and performance standards for refineries.

With the Obama Administration’s rulemaking machine now humming like a race car ready to enter the Indy 500, there is an avalanche of regulations in the pipeline:

  • Health care reform law – 159 new agencies, commissions, panels and other bodies
  • Dodd-Frank – 447 required or suggested rulemakings
  • EPA – more than 100 rulemakings in process, 30 listed as “economically significant,” or costing the economy more than $100 million.
  • Department of Labor – 100 rulemakings

That's billions of dollars of new costs on businesses, preventing them from hiring more workers and growing the economy.

Congress has passed laws designed to make agencies act with common sense. Sunstein has the authority, and even the responsibility, to enforce those laws, which include:

  • The Regulatory Flexibility Act of 1980 (RFA). Requires agencies to look back periodically at rules issued.
  • The Information Quality Act (IQA). Requires agencies to use the best available, peer-reviewed science and supporting studies conducted in accordance with sound and objective scientific practices along with data collected by accepted methods or best available methods.
  • The Paperwork Reduction Act of 1995 (PRA). Requires agencies to minimize compliance burdens and consult with members of the public and affected agencies concerning each proposed collection of information; look back and evaluate the accuracy of the agency's estimate of the burden of the proposed collection of information; take steps to enhance the quality, utility, and clarity of the information to be collected; and increase program efficiency and effectiveness.

In addition, President Obama’s Executive Order 13563, calls for rules to be "based on the best available science," to "identify and use the best, most innovative, and least burdensome tools for achieving regulatory ends," and to "take into account benefits and costs, both quantitative and qualitative."

While the results of President's executive order represent progress, the fact remains that agencies, most notably the EPA, are not adequately performing statutorily-required analyses of job impacts, economic impacts, small business impacts, and other burdens. Even the administration recognizes the problem, hence the Executive Order.

As I noted in my post in May, we need to make our flawed regulatory system smarter, less intrusive, and more accountable. Any such plan must require greater congressional oversight of rules that have a major economic impact; cost-benefit analyses and science reviews conducted entirely by independent third parties to ensure quality data and to remove politics from the equation; and greater judicial access for stakeholders so they can enforce transparency, check bureaucratic power, and hold governmental decision makers accountable.

As we move forward to reform a broken system, Sunstein should focus his efforts and use his authority to rein in regulations so that America’s job creators can start hiring again rather than attacking a prior Administration and the Chamber.  Sunstein’s misdirected “shooting the messenger” approach will only ensure that the regulatory system remains badly unbalanced, allowing the agencies to continue with actions that stifle economic and employment growth.

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